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Unlike factoring which requires little or no
credit history, your company will be required to have some credit
experience to qualify for ABL. Though its fees are slightly higher,
factoring is often the mechanism to build credit and "groom" a company for
ABL at a future date.
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Similar to factoring in many ways,
asset-based loans are those credit facilities collateralized by account receivable,
inventory and equipment. Asset-based lending is
utilized heavily by manufacturers and distributors. Unlike
factoring invoice arrangements, however, which
is the sale of your accounts receivable, ABL is always a loan.
Criteria for ABL lines of credit are substantially different than
factoring. Your company must:
• have well established
credit
• be seeking at least $250,000.
• have
substantial collateral with at least 2-1 coverage
• have
at least a 3 year experience of profitability
• have
audited financial statements
Though we are
primarily involved in commercial factoring at DMS Commercial Finance,
we also maintain
asset-based lending relationships with some of the
largest ABL providers in the nation.
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Copyright
Datamax
Marketing Systems 2010. All rights reserved. |
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